Can Facebook unseat Apple/Android at their own game, within their own ecosystem?

Facebook’s genesis was in terms of being a web destination and while Facebook is the no.1 mobile app globally across diverse platforms, Facebook was loosing traction to Android and Apple which harbored a collaborative eco-system approach. With 350 million users accessing facebook from Mobiles on a monthly basis that was too big an opportunity to hand it over to iOS and Android platforms.

Thus came into being Facebook’s recent push into HTML5 with Project Spartan,which features apps built for Facebook’s platform that can run on top of the Facebook Messenger app, instead of requiring the user to launch the iOS app equivalent. This poses a disintermediation challenge to Apple. Facebook is trying to beef up its payments system, Facebook Credits, to handle application payments and cut out the iTunes model ingrained into the iOS ecosystem.Facebook is demonstrating that it can leverage its hold over consumers at the software level, through the power of the social network, across multiple platforms.

So now, here’s an interesting question: Can Facebook unseat Apple/Android at its own game, within its own ecosystem?

Video and Content growth wave in the new Mobile economy

A research report by Ericsson endeavours to put some numbers to global data traffic projections: Mobile broadband subscriptions are expected to reach almost 5 billion in 2016, up from the expected 900 million by the end of 2011.That would represent 60% CAGR. Total smartphone traffic is expected to triple during 2011 and increase 12 fold by 2016 (roughly equal to PC generated traffic). Growth in mobile data traffic between 2011 and 2016 is mainly expected to be driven by video. By 2016 more than 30 percent of the world’s population will live in metropolitan and urban areas with a density of more than 1,000 people per square kilometer. These areas represent less than 1 percent of the Earth’s total land area, yet they are set to generate around 60 percent of total mobile traffic. Overall, an increase in mobile broadband, new smartphones, and higher app consumption will all drive the push for more data and Smartphones alone will account for a huge part of that.

Compare this to the growth in Global consumer Internet traffic which is expected to grow 5X during 2009-14 (CISCO report). Though the time intervals for both these data points are not concurrent, it highlights the growth perspective in data/internet led networks. The same report puts the growth in Mobility based data at 39X between 2009 and 2014. Increasing Video traffic driven by live video and TV are expected to drive global consumer internet video consumption by a factor of 10X between 2009-14 (and to me that is massively understated). The growth in Internet video consumption will be prevalent across all categories of Video: Internet to PC (Long, Short and Live), Internet to TV and Ambient Video/Internet PVR.

Driven by Lifestyle requirements, Living situation and Employment status, consumption of Internet video content is accelerating at a smart pace even as Content and its discovery itself is becoming smarter. What could this mean for consumers and the service providers ?
For the consumer: They would seek for capabilities that enable them to easily and securely access content, applications and infrastructure they seek from any location or device.

For the service provider: It would mean infrastructure capabilities that are re-usable, expandable, scalable for quick time to market and better insight and control over consumer’s end to end experience. Smart content delivery networks constitute a $6bn-$15bn market for service providers by 2015. Massive internet video growth drives puts forth huge operating challenges but also very unique revenue and monetization opportunities. Content management will perhaps not be enough unless the service providers are clear on their consumer segmentation, segment focus and positioning strategies and how much money could be made on these services. Again since this sector is fairly nascent at this point of time, regulatory and anti-trust considerations could also be key influencers.

Amazon Kindle “fires” up the tablet market!

Amazon Kindle Fire: Playing to a niche, it re-draws rules in the Tablet segment

The $199 pricing from Amazon, is one of the best examples of penetrative pricing- where by Amazon can make more money later by selling books, movies, music, apps through its app store. The reason Amazon can do it is because it has an offering very similar to Apple where it’s controlling the device, platform (it has a modified version of Android) and app store. Hence, it’s looking at a long term revenue by following a penetration pricing strategy. In doing so, it’s also utilizing its existing capacity of billions of gigabytes of cloud storage combined with Amazon Silk interface for faster loading of webpages to provide a better user experience.The reason other tablet players in the market such as Samsung, HTC, Motorola among others can’t follow this strategy, with the exception of apple, is because they only control the device part and have very little control over Android platform (controlled by Google) or app store (again influenced by Google).

On the flip side, Kindle Fire isn’t proper Android tablet. It is a forked version which means, whatever updates Google does will not make it to the Fire. It will Amazon’s prerogative to get the updates. Even the Android Market is out of bounds on the Kindle Fire. What really is unexplainable is the absence of HSPA capabilities on the tablet. Is it cost? For a mobile device which is heavily dependent on anytime available cloud service, not having a innate mobile connection capability is befuddling. And then there is the lack of Camera? Surely That wasn’t a huge investment that Amazon opted out of. It was hygiene.

Kindle Fire has shown us that a successful tablet launch isn’t all about the greatest hardware. It’s the apps and the ecosystem. Without which the brightest of the tablets are destined to fail. And don’t make the mistake of considering this a success for Android tablets. Because it is not. This is a tablet which only an Amazon could have pulled of. In fact Kindle Fire would be a nemesis of Android tablets. Now they have to compete with both iPad and Kindle Fire – one at the top end and one and the lower end of the spectrum.

Amazon has done a brilliant job of picking its niche and playing to its strength – content: gaming, video, music or eBooks and build an ecosystem around it and then start selling. That in essence is the purpose and motto of tablets- Tablet happens to be a conduit to digital consumption. And Amazon has seems to have hit the nail quite on its head.

Amazon Kindle Fire: Now we have something beyond iPad in Tablets!

…is there some way that we can bring all these things (Amazon web services, Prime, Kindle, Instant video, the MP3 store and the Amazon appstore for Android) together into a remarkable product offering that customers would love.The answer is yes. It’s called Kindle Fire.”
Amazon CEO Jeff Bezos

Did the penny drop or the cookie crumble on Wednesday, the 28th September 2011 in the new wonder segment of devices: Tablets? It was about time.. users were waiting for a credible challenge to Apple’s iPad in the tablet segment. And while the 7” Android Kindle Fire doesnot exactly go head to head with iPad2, it does set the tablet segment up nicely. That was something that Androids and Blackberrys in spite of a considerable smart-phone presence have not been able to establish in the last 2 years. For starters, Kindle Fire sells for $200 (as against $400-$500 tag for 7” tablets), but it’s the little details that count and for Amazon, it’s the fact that this is an end-to-end device that really makes it outstanding. Kindle Fire is about the content and the content defines the Fire.

For starters, Amazon forked out a huge amount of customization on Android somewhere between Froyo 2.2 and Gingerbread 2.3 to a point where the Android interface seems to look very different from what it really is. Heavy modifications and kitsch on the Android platform apart Amazon made sure the mash-up works and works well. Amazon the great integrator balanced the Android topwork along with seamless integration with Amazon services.

Kindle Fire comes with a 1 GHz dual core processor, 7-inch capacitive touch screen with IPS display and a resolution of 1024×600, free cloud storage, 8 GB internal memory, battery life for 8 hours reading or 7.5 hours of watching videos and WiFi- nothing ground breaking in terms of device…. Except for the service integration- The cloud service which Amazon offers is the brightest part of Kindle Fire. 10,000 movies and popular TV shows, 800,000 books which cost $9.99 or less and 2 million free books – that’s the US customers get access to when they buy Kindle Fire. Amazon has also introduced a Silk Browser which is purported to be a new way of doing things on a tablet.

Revival of the the MVNO: Apollo Hospitals launches a platform for Tele-Healthcare

Last September, Apollo joined Aircel to launch a tele healthcare delivery project. Tele medicine and tele triage facilities were made available to over 45 million subscribers of Aircel under the project then. Apollo at present has a capacity to cater to 100 million users. Apollo Hospitals has tied up with Idea Cellular and is in talks with three more telecom service providers for its mobile healthcare delivery programme. The company also wants to rope in insurance companies and other private sector firms to widen the network. The programme is also trying to rope in insurance companies, who already provide coverage to the patients, and can extend it to mobile health, thus making the service free of cost. With the subscribers of new service providers incorporated into the programme, Apollo expects to provide the service to 300 million users in 12 months. Apollo is expanding the service with more number of telecom service providers and is also adding more associated services in the platform.

MVNO has been a concept that has been scorned at after the debacle of the Virgin-Tata Teleservices MVNO effort. Sunil Bharti Mittal had written of MVNOs in a statement in 2009 and the industry seems to have forgotten the MVNO concept. I have always maintained that MVNO done the right way will be a business model that could create difference in the end game: revenues and bottomlines. Towards this, I had many months earlier provided the examples of European MVNOs who are engaged in delivering differentiated value to consumers.

To me, the Apollo model is a ideal and exemplary manner of launching MVNO services in India even though it is not referred to as MVNO services in the first place. Tele Medicine/Healthcare is an invaluable tool in health care as it helps patients to get service from doctors even in remote areas without the need of patient’s physical presence at Doctor’s clinic. The patient data is collected through various processes like history, data-entry, biometrics and integration of medical equipment. The data is stored and shared between healthcare professionals to diagnose, treat and follow-up be it (regular treatment, post–surgery etc).Some of the significant benefits are, reduced patient health risks; enhanced access to care for patients living in rural/remote areas; reduced healthcare delivery costs; saves time and travel; minimized hospital admissions and objective and timely clinical information.

Tele-Healthcare is a model consumer need and business opportunity and tele-healthcare delivery could be a huge platform. It would work on three levels

1. Tele-Triage: Treatment of common ailments which could take the crowd out of the clinics and hospitals. The Tele-healthcare provides an essential touchpoint for quick resolution of the common and daily health problems.
2. By integrating other services such as insurance, the platform could be versatile in terms of cross functional integration: Insurance, Medicine, Hospital services and more. This would take the pain out of healthcare services.
3. At a higher level, specific devices and healthcare apps could get integrated to deliver higher order medicine/healthcare services to people. Imagine not having to go to the clinic for bllod tests every week and instead doing the test at home and sending the relevant reports to the doctor.

From a business model perspective, Telecom Service providers need to look at services such as Healthcare, Learning and Long Distance education, utilities as a means of augmenting their drying profit streams. The sooner the better. MVNOs are promising in this space.

OS and Device agnostic Application platforms

Openwave (provider of context-aware mediation and messaging solutions) has announced Amplicity, a new browser-based concept, which would deliver apps seamlessly across different OSs and devices in an operator network. This is designed to enable developers to leverage valuable mobile operator network assets to more rapidly create and deliver applications within the browser. The intent is to enable developers to address hardware and software fragmentation through the use of web technologies, including HTML5. In order to improve the distribution process. Developers have always been making an effort to reach out to as many end users and devices as possible. The ability to build one application and have it reach as many users as possible without having to write different versions for different platforms and devices would benefit developers. Operators have always been an essential part of the internet ecosystem, and the data they possess is the key to beating over-the-top players in the battle for consumer mindshare. Openwave Amplicity allows operators to open up their networks to developers and third-party content providers to ultimately create smarter applications that rely on contextual information.

Using Openwave Amplicity, developers will be able to market their applications to consumers and enterprise customers across a number of platforms, which will enable them to monetize these applications through contextual advertising. The Operating System (OS) application development scenario is currently heavily segmented, which poses huge challenges to mobile application developers. Various versions of the same OS keep arriving into the market with continuous development of the platforms, while the developers also find it difficult to design applications compatible with all the mobile devices due to a vast difference in form factors and capabilities of hardware available today. Openwave Amplicity offers a cross-platform footprint based upon HTML-5 to address this issue and provides developers with enhanced OS, hardware and software compatibility. It also offers a more customized browsing experience to the consumers, who will be able to receive contextually relevant advertising and marketing offers on their mobile phones.

Hey Google! Why buy Groupon? (Part I)

Google has offered $6 billion to acquire Groupon, a 2 year old e-commerce portal. Opinions around this effort is vastly divided. The exorbitant $6 billion cost of acquisition would make this the second most expensive sale in history, only exceeded by sale of Cerent to Cisco in 1999 for $7billion in the thick of the Dot Com bubble. Google will be acquiring Groupon at almost double the price that it paid for DoubleClick. Groupon is expected to report $500 revenue for the year.Groupon was last evaluated at $1.35 billion 7 months back and the $6 billion price tag implies a 500% increase for Groupon valuation.

What is Groupon?
Groupon is a e-commerce portal which works on direct discount deals to consumers by local advertisers through eMail. It has about 35 million subscribers who receive email based ads and discount offers from local advertisers and uses the user base as a sales channel to generate bulk order deals. To that extent, the 35 million subscribers are also the distribution nodes for Groupon.

With $500 million revenues in 2 years, the distribution and discount model is fairly working for Groupon. However, given the fast and brilliant developments in the Web 2.0 domain, one is tempted to think if e-mail is really the best way to generate leads and revenue and the sustainability of the business.

Ironically, Groupon’s viral design (Subscribers getting bulk buying from their own social networks) is more closer to the Facebook P2P references and likes. To that extent, Groupon has a threat from Facebook which is also developing a product which will help merchants present discounts and offers to its 600 million users. If Facebook were to launch that service today, subscription could quickly ramp up to 35 million! Amazon is also looking to buy out Living Social. Living Social is a clone of Groupon in terms of e-commerce business models.

Thus Groupon’s only barrier to entry for other competition is only its first mover advantage which translates into critical mass. Facebook or Amazon could easily surmount this entry barrier with their huge subscription bases.

Thirdly, Groupon is waning in terms of influence and usage. Traffic has dropped by 33% in the last 4 months as reported by Quantcast. Refer to the chart below:

Given these facts, it certainly looks that Google is over-enthusiastic and overpaying for Groupon. Unless Google is seeing some other synergistic elements that we are blind about.

Part II: Google’s (possible) motives behind Groupon acquisition.

Apple: Of mobile and web payments and virtual currencies. The future of money transaction

Apple for a while has been rumored to be interested in and working on mobile payments. Given the strength of Apple’s great innovation track record and the influence that Apple products wield over the industry, technology and the eco-system, Apple’s interest in Mobile payments is noteworthy. Time and again, repeatedly, Apple has brought forth innovations in various segments it has operated in viz. smartphones (iPhone), Tablets (iPad), Application (Apps store), Music (iTunes and iPod). Given Apple’s stake in Web 2.0 and Mobile 2.0 technologies, a mobile payment platform is a natural extension, a transaction enabler and the missing piece of the monetization game.

Not that Apple is new to the game. They are already doing mobile payments since they launched the iPhone. Their solution is built on an existing payment relationship – iTunes to download music on the web. Apple’s 160 million iTunes users outweigh Paypal’s 90 million.

Contactless payments or Near Field Communication chip iPhones could open up payments and they could help create new business models for in store payments. This could also couple with location based ads and other applications. Apple drove the development of new business models with the music and smart phones – depending on what they do they could change the rules by which different players interact to do payment and commerce. So they have the potential to move the NFC world forward significantly by developing a new tapestry of the hardware, software and business models to move it forward. While NFC has been on the horizon for a while with sporadic trials by Obopay and others, Apple moving into this space should ignite the market. Apple’s moves will have particularly powerful impact, and the only other player who is also mulling contactless payment solutions at this point is Google.

Apart from Contactless payments, Apple is also trying to specialize in allowing users to use their mobile phone number to purchase digital content on the web using their phone number and their phone bill. Boku, a gateway specialist in Mobile carrier billing is rumored to be in talks with Apple for a possible acquisition.

Then there is this talk of Apple trying to create an online Virtual currency much like the Facebook credits for the Application and iTunes purchases. There are significant volumes in there for Apple and again the eco-system is pretty well set and Apple would only need to put the online currency in place for this transaction system to talk off as well. This would mostly cater to P2P payments transfer, casual payments, payments to individual merchants, cross border remittances and check replacement. In markets where P2P is fully implemented it represents over 50% of the mobile payment transactions. This is a big opportunity and right in Obopay’s sweet spot.

Apple is already big in mobile payments with iTunes and Apps store and Apple would sooner be looking to leverage this play into a bigger pie of online and instore payments.

Open Source and DRM: The Netflix-Android case-study

While Open Source has become the stumbling block to Netflix riding the Android wave, Netflix has time on its side to address the small screen video streaming phenomenon for global masses

Netflix is possibly the world’s largest on-demand video service with on-demand video streaming over the internet and rent-by-mail DVD/Blue Ray service. Google’s Android and Netflix have been in discussion over attempts to monetize the platform with video streaming.

Android as a smartphone platform and the fastest growing one at that, has synergies with NetFlix. While Netflix benefits from the burgeoning Android numbers, Android would gain in terms of being able to host Netflix video streaming for its users. Inspite of the best intentions from both the parties, it is Google’s Open Source roots that is turning out to be a stumbling block for Netflix hosting on Android smartphones. The main concern revolves around platform security and content protection mechanisms which currently don’t meet with film and TV studio demands that Netflix has to adhere to. The problem is that in making the phones a place for playing the content, the DRM will undoubtedly ruin the best features of the phones, their open architecture and the ability to modify them to one’s own desires. Smartphones have memory card slots, and no movie studio is going to want users to have the ability to save the movies to a card, for later enjoyment – because they see later enjoyment being had by others, on other phones. That will generally be the steps to lock down the cards from any access, at least while the streaming is occurring. DRM issues have been worked out on XBoxes and PS3s, but then they don’t have anything close to the open code that Androids share. The movie studios are no doubt worried that it will only be a hop, skip, and a jump command for the content funneled to a phone to make its way to a PC, where it can be duplicated, modified, and made available to the greater viewing public, without any sort of prior payment arranged.

Android is working with individual handset makers to add the necessary content protection that would allow them to bundle in the Netflix app. However the exact models and required OS versions have yet to be announced. While this clearly is not the preferred solution, however, provision of services for some Android device owners is better than denying it to everyone.Thus one may expect to see some Androids sporting the Netflix by 2011.

Given that Netflix usage is mostly US and Canada based, this delay may be inconsequential. People prefer large screens for long form video viewing. Thus, Netflix CEO Reed Hastings is not hugely concerned about the impact of iPad, PS3 and Wii on viewerships of Netflix. Long-form video viewing does not translate that well to mobile platforms.The story will be very different in developing markets, where big-screen TVs are less commonplace and cheap tablet devices will soon be readily available. NetFlix plans to address the DRM-Android Compatibility over the next three to five years, via a strategically planned rollout based primarily on bandwidth constraints.

Impact of HTML5 based browsers on the Mobile Applications eco-system and marketplace

The proliferation of HTML 5-based browsers in 2011 will likely change the way content providers approach the mobile application marketplace.

Content providers today are spending too much of their resources building specific mobile apps for different platforms on different devices. Every time there is a new platform and a new device introduced to the market, a content provider needs to build a new app using different specifications to fit the operating system (OS) and device screensize. This is not an efficient way forward for content providers as there are hundreds of phones in the market with different form factors, making it time consuming and resource-intensive. The tide is expected to change for content providers with the wider use of HTML 5.

Interoperability across devices, platforms

With HTML 5, content providers need not build an app for each different OS and each different screen-size. Instead, developers will only need to build a ‘smart bookmark’, which is a link that will effectively call out a device’s browser and direct it to a content provider’s Web site. Because a HTML 5-enabled browser can access a device’s features through APIs (application programming interfaces) and can call out features, such as geo-location to contextualize the content, the browser can now have the same features available in the mobile app

For example, a mobile user can click on a smart bookmark and activate his device’s HTML-enabled browser, which can then provide localized news and weather reports, emulating what specific mobile apps can do today. This will fundamentally change the game for content providers as there is no need to rebuild an app over and over again just because a new device with a new operating system has come into the market.

With the use of smart bookmarks, purchased apps will no longer be locked into a specific platform. If a user buys an app meant for an Apple iPhone, he would need to buy it again if I had a Google Android phone. With HTML 5 and smart bookmarks, users can have access to my content regardless of the platform because access to content [will be] based on a subscription and not a download model. However, the business model will require Content providers and operators will need to work out details regarding revenue-sharing.